2G GSM / CDMA

Demonetization + Jio to impact Airtel, Vodafone Idea

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jio-impact-on-airtel-vodafone-ideaDespite some respite from being allowed to accept old Rs 500 / 1,000 notes for a brief period, the two big events, i.e. demonetization and full quarter of Jio’s free services, are likely to result in a sharp sequential revenue decline. Pressure from Jio’s free launch offers is likely to be felt on three fronts – data volumes (as industry’s paid volumes take an expected knock), data pricing (as the incumbents try to hold on to data volumes) and voice pricing (initial impact of bundled offerings in line with Jio’s announced pricing construct + step-up in aggression on pure voice plans)

Jio’s free offers have resulted in a sharp

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Mobile Consumers Satisfied with Incumbents; Jio Pressure Likely

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jio-pressure-on-airtel-vodafone-ideaA survey was conducted by Telecom Research wing of Merrill Lynch after Jio launched its free voice / data offering on Sept 5. In the sample, 75% of these consumers who participated in the survey have monthly bills of Rs 250 or more. The main results of the survey are as follows,

  • Call drops are not a major issue, with only 15% complaining about it; bigger issues are slow data speeds (as per 25%) and a no value for money proposition.
  •  39% of consumers we surveyed have tried Jio’s free offering, with 27% happy with the service (which translates into 70% of actual Jio users) and rating the service better than their existing operator and the remainder believing Jio is at par or inferior to

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Does Uninor has Business Case without Mobile Data Service ?

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Uninor IndiaTelenor / Uninor India turned profitable in Q2FY15 with reported EBITDA of INR 192mn for the first time since starting operations in FY09, although revenue remains flat at INR 11bn QoQ. Traffic grew by 2.9% to 48.7mn minutes, led by healthy subscriber growth of 4.2% partly offset by a 1.3% MOU decline to 414 (unlike Idea’s 2.0% MOU improvement). Voice RPM fell by 1.8% to INR 0.226/minute, lower than Idea’ RPM fall of 2.9%. Management had said the company is a net payer of interconnect charges, due to its lower market share; the reduction in IUC gave a boost to EBITDA and has had a lower impact on RPM. RPM is still at one-third discount to Bharti Airtel & Idea Cellular, and is yet to reach profitability; this is contrary to Consensus view that low RPM may not allow Telenor to reach

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2015 Spectrum Auction Implications – Entry Cost Rises, Tariffs Look Up

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The mega 2015 spectrum auctions finally concluded after 19 days and 115 rounds of aggressive bidding. The Clearing Prices are as shown in this chart.

Entry Cost for Wireless Operators Rise Significantly in India
Even as most of the challengers (barring RCOM) did not face spectrum renewals in these auctions, their medium-term prospects of survival in the Indian wireless market just got bleaker, in our view. High spectrum prices are now a reality, for all operators, irrespective of their revenue market share. Spectrum pricing has now hit a level where even the most efficient operators

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DoT & TRAI Differ on Minimum Block Size for Feb 2015 Auction

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TRAI had recommended a minimum bid block size of 3.6 MHz for 900 band spectrum versus the 5 MHz bid block size stipulated for the Feb 2014 auctions. The DoT argued that there has been no change in market dynamics since the Feb 2014 auctions and hence there is no need to change the minimum bid block size.

The TRAI, rightly noting the limited availability of spectrum in these auctions and the much-higher possibility of irrational/tactical bids with a 5 MHz bid block size, has reiterated its earlier recommendation of keeping the minimum bid block size at 3.6 MHz (for all circles except West Bengal where the TRAI recommends 2.4 MHz noting availability of only 4.4 MHz spectrum in

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800Mn Active Mobile Subscribers, 85%+ on GSM Network

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The GSM active subscriber base (excluding RCom & Tata GSM subs) has increased 5.9% from 603 mn in Dec-13 to 639 mn in Jul-14. India’s total active subscriber base (GSM & CDMA) has expanded from 762 mn subscribers to 797 mn in this period. We expect subscriber addition to moderate in the medium-to-longer term due to two reasons: 1) Indian telcos’ focus on “profitable” subs, and 2) incremental sub additions primarily accrue from rural areas, where growth will likely be slower.

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Uninor /Telenor Improving Market Position

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Telenor India / Uninor reported robust revenue of INR 10.2bn, up 9.6% QoQ. This was led by healthy subscriber-led traffic growth of 4.5% and a 5.1% RPM increase. Telenor hiked its voice RPM by 5.1% to INR 0.241/min, but it was still one-third the discount to Airtel and Idea Cellular.

Traffic growth of 4.5% was led by strong 2mn subscriber addition during the quarter of about 6.6% subscriber growth. MOU fell by 3% to 449 mins after a sustained rise over the past five quarters. Telenor’s MOU was above Idea’s and Airtel’s of 401 and 433, respectively, due to its low price offerings, which was largely due to the 2nd SIM phenomena. ARPU grew by 1.9% to INR 108 despite the

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Telenor India / Uninor has 16% 2G Data Subscribers

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Uninor India GrowsUninor, the Indian Subsidiary of Telenor is witnessing promising trends in data growth and is now focused on growing data usage. Currently, nearly 16% of its subscribers are active data users, and it plans to continue offering data on the 2G platform as 3G data usage is limited in India.

Telenor India reported revenue of INR 9.3bn, up 8.7% QoQ, led by healthy 13.6% traffic growth on the back of 2.5 mn subscriber additions and a 4.8% MOU increase. MOU has grown 50% over the past 10 quarters, driven by a 27% price cut during the same period. Thus, the company’s strategy has been to drive traffic and improve capacity utilization by undercutting

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How 95% Pre-Paid Users with Unbundled Packages Will Deter Airtel / Vodafone/ Idea ?

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Unbundled Pre-Paid Users a Liablity on TelcosThe A-Vo-Id [Airtel, Vodafone, Idea Cellular] Telecom Operator Lobby Control over 2/3rd of the Indian Telecom Market. They have ~95% of their subscribers on the pre-paid platform and never did they make any effort to convert them to post-paid. Never did you see them offering Bundled Packages [SmartPhones,Unlimited Voice, SMS and 3G Data] even in post-paid segment. Reliance Communications was the only exception in this regard which offered iPhone and Unlimited Calling Pack.

To date, A-Vo-Id operators focus has been on cannibalisation of SMS revenues by messaging apps (WhatsApp, Viber, WeChat, etc). Clearly, the advent of OTT voice adds an additional potential threat. At first glance, the amount of revenue exposed to

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